Sep 06
15
Commodity Market Sensitivity
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As Stephen Roach points out so aptly, we are now treating commodities as an assett class. You can either believe in the concept of there being some ultimate balancing mechanism, or you can believe that things will keep on going up, up and away…
As he says:
I am not looking for a crash in commodity markets. But as China slows and the US
property bubble bursts, a broad and protracted downturn can be expected
in most economically-sensitive commodity markets, including oil. Investor involvement in these markets can only compound the downside.
property bubble bursts, a broad and protracted downturn can be expected
in most economically-sensitive commodity markets, including oil. Investor involvement in these markets can only compound the downside.
What does this mean for us mere mortals?.
Watch out for the US property market – the bubble-burst is going to impact all of us, and because things always seem to happen when you least expect or want them to, watch out for a burst to happen in conjunction with some other event…. non-market driven…. environmental perhaps?